Hon Hai announces first fall in annual sales since 1991

Jan 10, 2017LegalComments Off on Hon Hai announces first fall in annual sales since 1991

Hon Hai Precision Industry Co. (??), the world's largest contract electronics maker, announced that consolidated sales for 2016 fell from a year earlier, the first time the iPhone assembler has suffered a year-on-year fall in revenue since it was listed on Taiwan's main board in 1991.

Market analysts said that the fall in sales reflected lower than expected shipments of the iPhone 7 model, the latest Apple Inc. smartphone, which went on sale globally in September 2016.

Last year, Hon Hai posted NT$4.36 trillion (US$136 billion) in consolidated sales, down 2.81 percent from 2015, when revenue hit a record high of NT$4.48 trillion, the company's data showed.

The sales data was released after the local stock market closed on Tuesday. Ahead of the data, shares in Hon Hai rose 0.60 percent to close at NT$84.00 on the Taiwan Stock Exchange, where the weighted index edged up 0.08 percent to end the day at 9,349.64 points.

In December, Hon Hai's consolidated sales stood at NT$449.64 billion, down 6.45 percent from a month earlier but up 9.76 percent year-on-year. Analysts said that shipments of the 4.7-inch iPhone 7 appeared slower than expected in the month, ensuring December sales failed to pass the NT$500 billion the market had widely expected.

Japan's Nikkei Asian Review reported on Sunday that Hon Hai and Sharp Corp. of Japan, in which the Taiwanese firm holds a 66 percent stake, have been studying the feasibility of setting up an organic light-emitting diode (OLED) plant in Zhengzhou in an attempt to supply OLED screens for the next generation of iPhones.

In addition to iPhones, Hon Hai also assembles iPads for Apple. The U.S. consumer electronics giant accounts for more than 40 percent of Hon Hai's total annual revenue. In the fourth quarter of last year, Hon Hai posted NT$1.40 trillion in consolidated sales, up 30.4 percent from the previous quarter as the October-December period is a traditional peak season for the consumer electronics industry.

Looking ahead, analysts said that with the slowdown in demand from China, one of the largest buyers of Apple's gadgets, iPhone shipments for the first quarter of this year could fall from last year, which would further impact Hon Hai's sales.

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